Such old economy approaches have become outdated. Freelancers and micro- and small SMEs increasingly use digital-first tools to run their business, which generate a plethora of data that can be leveraged to create tailored banking products. Beyond that, new forms of digital-era business models and assets are underpinning the growth of completely new types of businesses, such as highly specialised freelancers, global gig workers, drop shipping firms, direct-to-consumer e-commerce sellers, passion economy creators (using new platforms like Substack, Shopify, Patreon, Teachable or Cameo, to name a few), niche marketplaces and platforms or highly specialised technology firms.
All of these businesses seek financial products that fit their business needs, not the other way around. Promising directions include fully digital business accounts with superior user experiences, data integration and automation, self-service, 24/7 onboarding solutions, founder accounts in order to pay in share capital, individual business financing solutions built on real-time data, as well as modern digital banking interfaces that integrate with third party business software.
The combination of a growing, fragmented market that incumbent players have traditionally neglected and an increasing digital adoption rate has now resulted in the formation of several innovative fintechs that aim to re-design business banking. Stay tuned for our next post, which provides a deep-dive analysis of Europe’s leading SME-focused fintech companies.